Question for the Money Doctors

Question

My mother has a bank account with about $160k in it. When she passes away, i and my brother are P.O.D., so the money will go to us. Do we have to pay tax on that money?

Answer

There is no tax due on this since it is an inheritance. Since the account was set up as POD, there is no probate so you should not be paying any probate or estate taxes. The bank may have some requirements such as death certificate, copies of a will, and your identification. The bank will let you know what they need to process this for you. If this is a CD, there may be some interest income that you will be paying taxes on. You will get a Form 1099-INT reporting this to you and your brother.